The Impact of a Terrorist Act to the Inbound Tourism Study Case: How Bali Bombing Affects the Tourism in Bali

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The Impact of A Terrorist Act
to The Inbound Tourism
Study Case: How Bali Bombing Affects the Tourism in Bali

Introduction
As the third biggest industry in Indonesia and the biggest industry in Bali, tourism is an important industry that will definitely have such a big role in the country’s economy. There was 20% of Bali’s working population which directly involved in the tourism industry. Moreover, in 2001, there were 5.1 million tourists that visited Indonesia and most of them ended up in Bali at one stage. The importance of the tourism industry in Bali was disturbed by the first Bali bombing that happened in October 12, 2002 and causing 202 casualties which triggered a dreadful impact for tourism industry. The tragedy is called as the worst terrorist act in Indonesia’s history. It also became biggest tragedy experienced by the Bali’s provincial government since Bali had a dramatic fall in terms of international visitor numbers later on. At least 57 percent of number of tourists were decreased because the issuing of travel warning from countries such as Australia, America and also several countries in Europe. This became a huge loss for Bali since the gross regional domestic product (GRDP) in Bali is predominantly generated from tourism. Moreover, most hotels were collapsed due to the low occupancy. The negative images and growing concerns regarding safety served to undermine the tourism industry in Bali (Kalla, 2003). The decrease in the number of tourists also had spillover effects which reducing Indonesia’s foreign exchange income that also negatively affected the Indonesia's economic recovery. After the bombing, Indonesia’s GDP in the fourth quarter of 2002 also fell sharply to 2.61 percent compared to the previous quarter. The tourism sector was also down as much as 0.9 percent. But in early 2003, GDP had grown by 2.04 percent return, including the tourism sector grew 0.47 percent. This paper signifies the impacts regarding the first Bali bombing that happened in 2002 on international visitor arrivals in Bali. Specifically, this paper will demonstrate how terrorism act can impact the image of a tourism destination and later on affect the number of the inbound tourism.

Research Questions
How a terrorist act can affect an inbound tourism of a destination? In this paper, the author would use the impact of the first Bali bombing to the tourism industry in Bali as the case study.

Theoretical Framework and Methodology
According to a Gallup Poll conducted for Newsweek in April 1986, 79% of Americans said they would reject an opportunity to travel overseas because of the threat of terrorism. Based on the fact above, the author finds that the theory that is suitable to the aforementioned research question is a theory that links between terrorism and tourism. This theory had been conducted by Enders and Sandler (1991) and Enders, Sandler, and Parise (1992). Although Enders and Sandler conducted the research on the negative impact of terrorism on tourism in Spain from 1970 to 1988, the author believes that the theory can also be applied to this case. On their findings, Enders and Sandler found a significant negative impact of terrorism on tourism in Spain. Enders, Sandler, and Parise studied a large sample of European countries during the period from 1974 to 1988. Their findings proved that terrorist act have a bad effect on tourism revenue in Europe and furthermore causing potential tourists to change their travel destination in order to feel safer and secured. To understand more about the decision-making process of a tourist, the author finds that tourists are rational consumers and move through the decision-making process by weighing benefits against costs, as shown as in the next figure. Risks from terrorism at a destination increase the level of tourists’ perceived risks and so increase the cost of the experience, which then results in the rejection of which one perceived as unsafe (Enders and...
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